Bulge Bracket or Boutique IB?

Prior to the financial crisis of 2008 there was little doubt that if you were a Wall Street-minded undergrad or MBA student and were offered a position with a bulge bracket bank (the likes of Goldman Sachs, Morgan Stanley, J.P. Morgan, Citi, and Credit Suisse, among others) you would've accepted without thinking twice. However, that was prior to Fab Fab, the London Whale, Citi almost folding, BofA swallowing Merrill (and keeping a few billion in losses a secret), Barclays' Libor-rigging scandal, etc. That is, today the bulge bracket has become a much less desirable place to be employed. Some even call it dancing with Beelzebub to accept a regular paycheck from one of the largest players on Wall Street. Others say at the very least it's a gamble with long shot odds: given all the layoff rounds that have been announced in the past few years from the bulge bracket C-suite, those joining the bulge might be accepting an offer as well as a severance package within the same 24-month period.

All that aside, the bulge bracket does a few things well and, on average, does them better than its boutique (a/k/a smaller) investment banking peers. Those things are, according to preliminary findings of Vault's 2012 Banking Survey: provide a brand name on a resume that is recognized throughout the world (that is, offer superior prestige); provide young bankers with top-notch initial formal training programs (the bulge can afford to give its bankers very thorough in-house schooling); promotes diversity (although the bulge bracket still has a ways to go to have workforces that reflect the makeup of the wider population, the largest banks put a lot of cash behind trying to improve diversity within its ranks and are generally more diverse than boutiques); and make an effort to promote green initiatives (the largest banks tend to focus a great deal on environmental initiatives; perhaps it's due to the fact that green initiatives are great for PR, or perhaps they've come to realize their green policies can be influential; but for whatever reason, they do).

On the other hand, in general, the so-called investment banking boutiques (the likes of Greenhill, Evercore, Centerview, Perella Weinberg, and Gleacher, among others) outperform their bulge bracket peers in these areas: overall job satisfaction, firm culture, client interaction, ability to challenge, compensation, and benefits. In other words, the quality of life at the boutiques is, on average, better than at the bulge brackets.

While this may come as no surprise, it's worth noting just how satisfied many boutique bankers are with many aspects of their jobs, while there are scores of bulge bracket bankers who are extremely unsatisfied.

As an example of life at a boutique, here's one banker at a top advisory boutique speaking about his job satisfaction:

“Quality of life is a priority here, starting with a great financial base and ending with true job satisfaction. The firm pays very well, at or above the Street for top performers. It provides opportunities to transfer either temporarily or permanently to other offices. And above all, there is a quiet mantra the firm employs: ‘Do the right thing.’ At the end of the day you can sleep easy knowing that you created value for your clients (not just your firm), you made life easier for the senior members of your deal team, and you helped members of your junior team develop into smarter, faster, and overall more valuable members of the firms.”

Another banker at another boutique has this to say about his firm's culture:

"While the hours in banking are long, our incredibly collaborative, laid-back, entrepreneurial, and flat culture makes the hours spent in the office enjoyable. We seem to recruit a certain type of candidate that fit this culture and I consider many of my coworkers (analyst level and even up through VPs) to be some of my closest friends."

With respect to client interaction, here's what a young banker at yet another boutique has to say:

"We provide an unparalleled analyst experience in terms of exposure to a wide variety of analyses, a high level of client interaction, and the opportunity to work across all industries. Analysts work within lean teams, which leads to a very steep learning curve. In terms of an investment banking learning experience, it is difficult to imagine a better situation than being an analyst here.”

There are, however, some drawbacks to working at a smaller shop (in addition to the categories cited above in which the bulge bracket bests the boutiques). Here's an insider at one of the top boutiques speaking about deal team size:

"The small size and lean deal teams can be a double-edged sword: one of the best aspects of our M&A practice is that associates are often asked to play the role of VPs very early in their careers, but the downside is that VPs must often still play the role of associates—having either an associate or a VP on a deal team, but not both, is fairly common.”

Another small-shop banker notes the following on the subject:

“Senior bankers treat everyone respectfully. Bullying is simply not allowed. Also, junior team members receive a great deal of responsibility early on. The trade-off is that given the thin deal teams, hours can be quite demanding.”

That is, hours are no less demanding than they are at the bulge bracket. So, if you're looking for a short workweek, you'll have to look outside the bulge bracket, as well as the boutiques.

Finally, I should also point out that this year in our Banking Survey we asked survey respondents (about 3,500 banking professionals took the survey) to tell us the names of the firms whose job offers they didn't accept—that is, the offers that bankers passed over to accept an offer with their current employer. And what we found out is that many boutique bankers passed over the likes the Goldman, Morgan Stanley, Credit Suisse, J.P. Morgan, and other large firms. Which perhaps points to the ground the boutiques have been gaining on the bulge bracket with respect to attracting the top, young Wall Street talent.

In any case, check back in a few weeks, as we'll soon be releasing all the results of our annual Banking Survey, including which firms will be named part of the Vault Banking 50, our annual ranking of the best investment banks to work for in North America.

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